Chrysler still sees GM merger as best bet

Desperate times call for desperate measures and at Chrysler it appears every option is on the table. The Auburn Hills carmaker has been tied with at least five major carmakers in the past six months, even coming close to a merger with Detroit rival General Motors. While such a move may seem a little like the blind leading the blind, Chrysler in its latest viability plan said it still believes a partnership with GM is the "best option for the U.S. auto industry."

Speaking with Bloomberg, Chrysler spokesman Stuart Schorr explained that a GM tie-up “would create a company better positioned to compete with Toyota and other non-U.S. automakers.”

But remember, this is the same company negotiating with Fiat over a 35% acquisition and technology sharing deal. The message being sent to the U.S. Treasury and the Obama administration, however, is that both GM and Chrysler may be dead if they continue to proceed alone.

Chrysler's hope is that with enough prodding, the government may force some kind of an alliance with GM but right now nothing is confirmed. The Obama administration is currently contemplating lending GM and Chrysler a combined $21.6 billion in new loans, and this ultimately could lead to the government persuading GM into an alliance.

The key word here is persuade as GM previously pulled out of alliance talks with Chrysler, citing a desire to focus on its own survival as the main reason. At present both GM and Chrysler claim they are not looking at renewing partnership talks but if such a move is ideal then it may fall on the government to decide upon. So far the Obama administration hasn’t signalled what direction it might take but there’s no doubt that some major changes and restructuring are on the horizon for the U.S. auto industry.